Articles Posted inDiversity

As noted by Michael Fox in a recent post on his Employer’s Lawyer blog,, an OFCCP Administrative Law Judge (ALJ) just released a 66-page decision in a case that began with an audit notice in 1993. The case was bogged down in large part due to the bank’s contention that it was not selected for audit in accordance with its constitutional right under the Fourth Amendment to be free from unreasonable searches and seizures. That claim was ultimately unsuccessful. As a result of the delay, though, the bank found itself litigating claims about hiring practices dating back to 1993. Not surprisingly, the recollections of key witnesses such as the recruiters were foggy on some points.

But, in essence, the trial boiled down to a battle of the experts, who each advocated his or her own method of statistically analyzing the hiring data. The analysis of the OFCCP’s labor economist/statistician disregarded several of the bank’s legitimate business reasons for rejecting applicants because of evidence provided by the recruiters regarding how they coded applicants.

For each applicant, the recruiters were to use a code to indicate the outcome of the application. For example, they used a certain code to indicate that the applicant was not interested in working the hours that were available, and another code to indicate that the applicant had failed the credit check. Unfortunately, the recruiters testified that they did not use the code consistently.

If someone told the recruiter that her or she was not interested in the hours and/or the wages being offered, the recruiters sometimes used the code for “no position available” rather than the code used to indicate that the hours or wages were not acceptable to the applicant. To the OFCCP’s expert, this justified treating the hours code as entirely unreliable.

He also disregarded the code the recruiters used to indicate that the applicant was rejected based on his or her credit report for several reasons: (1) the recruiters did not have a consistent system for screening based on a credit report, (2) there was no evidence validating the use of credit reports as a test for success in the job, (3) the bank stopped using credit reports in 1994, and (4) the use of credit reports as a screening device adversely impacted African-Americans. The bank had not retained copies of the credit reports, so it was not possible to determine whether the recruiters used the credit reports in a consistent way as between white and African-American applicants.

When the employer’s expert analyzed the hiring decisions and excluded the people who had been rejected based on hours preferences or the credit check, the outcome was that there was no statistically significant evidence of discrimination. When the OFCCP’s expert analyzed the same hiring decisions but included the applicants who had been rejected based on the hours and credit check results, there was strong statistical evidence of discrimination.

The ALJ also rejected the bank’s expert’s opinion that the bank had hired more African-Americans for the jobs in question than would be predicted if the analysis had been based on the overall availability statistics for the Charlotte metropolitan statistical area for 1993. The ALJ wrote that “it is well established that the applicant flow data, which documents the actual labor pool relevant to the hiring decisions at issue, is ‘highly relevant evidence of an employer’s labor market.’”

This proposition is one that, in my experience, is theoretically appealing but completely out of sync with reality. The reality is that applicants’ self-identification of race and gender by applicants is voluntary, and a large number of them do not self-identify. Consequently, the employer, the courts and labor economists running statistical analyses will never have an accurate picture of the racial characteristics of the “applicant pool” from which the hires were made. Given that the information about the race and gender of the “applicant pool” is always incomplete and inaccurate, it is difficult to understand how applicant flow data can be more relevant and reliable than census data.

Anyway, this case still is not over. The ALJ has to decide what the damages number will be, and after that, if the case does not settle, appeals seem likely.

Responding to a lawsuit, the OFCCP previously agreed to delay implementation of the new mandate that federal contractors use E-Verify. The lawsuit, as you may recall from previous posts, was filed by the Society for Human Resource Management (SHRM), and other organizations.

The original effective date of the mandatory E-Verify requirement was January 15, 2009. That date subsequently was changed to February 20, 2009. And, today, it appears that the start date for the mandatory use of E-Verify has been delayed again–this time until May 21, 2009, to allow the new administration time to review and evaluate the rule and the arguments against conversion to a fully mandatory E-Verify system.

Affirmative Action is back in employment-law news. In November, voters in three states (Arizona, Colorado and Nebraska), will decide whether to end consideration of race in admissions to public universities, and in hiring and contract awards by state and local governments. California, Washington and Michigan have already passed similar initiatives.

Opponents of affirmative action argue that it is no longer needed and causes reverse discrimination against whites and Asians. Proponents argue that affirmative action is still necessary to provide assistance to historically oppressed minority groups.

All three proposed measures are under attack in court based on claims that the signatures needed to put the issue on the ballot were obtained through misleading signers about what the purpose of the measure was.

State measures ending affirmative action programs have no effect on the obligation of federal contractors and subcontractors to create and implement written affirmative action plans, because federal affirmative action requirements are imposed through executive orders signed by the President and regulations created and implemented by the federal Office of Federal Contract Compliance Programs.

Corporations normally employ both in-house and outside counsel to handle its legal matters. In recent years, many global companies have begun paying closer attention to the diverse makeup of the outside firms they hire. The [logical] thought being that, if the company is going to put an emphasis on a diverse workplace, why shouldn’t it hold their contractors to the same standards? Wal-Mart and Microsoft have recently announced plans to improve diversity in very proactive ways taking very different approaches. One could say they represent the carrot-and-the-stick approach.

Microsoft’s Carrot

Microsoft’s recently announced diversity initiative is the “carrot” approach–designed to reward firms that comply with its requests. The plan is to award bonuses to outside counsel based on their inclusion of minority and women attorneys. The plan will apply to the company’s 17 “Premier Preferred Provider” law firms, which are said to receive about $150 million a year in fees.

Wal-Mart’s Stick

Wal-Mart, the country’s largest private-sector employer, has deployed new proprietary software to monitor the diversity in the law firms it hires. The software will monitor whether the attorneys hired as outside counsel to work on Wal-Mart matters are diverse. Firms that fail to meet the ongoing criteria will be dropped as counsel.

The Office of Federal Contract Compliance Programs (OFCCP) issued a final rule on mandatory job listing by federal contracts. The rule is equired by the Vietnam Era Veterans’ Readjustment Assistance Act,* (“VEVRAA”) and the Jobs for Veterans Act of 2002 (“JVA”). Federal contractors are required to list almost all job openings with “the state workforce agency job bank where the opening occurs or with the local employment service delivery system where the opening occurs.” The exceptions to this rule include openings for executive and top management positions, positions that are to be filled internally, and positions that will last three days or less.

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